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TV10s John Moczulski on closed captioned advertising

RBR/TVBR met with TV10s President John Moczulski at the AAAAs last week in New Orleans and asked him a bit about his company. He was also a panelist for "Using Nontraditional Media in Nontraditional Ways" there at the conference.

TV10s, a sales and marketing firm specializing in the sale of closed-captioning sponsorships and promotional advertising, is dedicated to the expansion of advertiser opportunities through 10-second short-form messaging in a variety of both existing and emerging media.

Moczulski has more than 33 years of experience in advertising, communications and media covering a full spectrum of industries. His background includes executive posts at Viacom Television Group, CBS, Columbia TriStar Television, KGO-TV, ABC/KABC, NBC/KNBC and Carson & Roberts Advertising.

Here, we ask:

What are the FCC rules regarding Closed Captioning?

As part of the Telecommunications Act of 1996, Congress instructed the commission [FCC] to require video program distributors [cable operators, broadcasters, satellite distributors and other multi-channel video programming distributors] to phase in closed captioning of their television programs. In 1997 the FCC, implemented rules to provide a transition schedule for video program distributors to follow in providing more captioned programming. The rules require that distributors provide an increasing amount of captioned programming according to a set schedule. All English language programming prepared or formatted for display on analog television and first shown on or after January 1, 1998 must be captioned according to benchmarks set by the FCC. By January 1, 2006 and thereafter 100% of all programming with some exceptions [Spanish Language, programs shown between 2:00a - 6:00a, locally produced and distributed non - news programming] must be captioned.

Which advertisers have so far used your service for closed captioning and otherwise?

Some of the advertisers that work with TV10s included: Nestles, Lea & Perrins*, GSK*, Odor Eaters, Sherwin Williams, Scott's Liquid Gold, Lending Tree, Quaker Oats Cereal, Stagg Chili, Liquid Plumber, Warner Brothers Home Video and Geico. Additionally, P&G, Unilever, J&J and many other national advertiser use the category. *Closed Captioning as well as 10 Sec IDs

What other media do you offer short form texting ad messages in?

We are currently talking to several search engines about the potential adaptation of our short form units. Television station groups have shown interest in investigating potential revenue generating promotional opportunities utilizing text messaging technologies. We are actively working with two studios to introduce our advertising vehicle to home video releases, and executed "commercial free" sponsorship of the NFL Network's On-Demand package this past season on Comcast. Additionally, we've had meetings with more than one theatrical entertainment company about short form promotional messages integrated into theater media.

How does the ad message get worked into the content?

There are a variety of ways that we explore to integrate a sponsoring partner's brand message through direct mention by or interaction with the on-air talent or announcer in the program content, or as a lead-in/ lead-out piece to the program content.

Got any success stories for advertisers using this?

We have several "success" stories that are currently in the making. Since opening the company in the Spring of 2004, we've been selling totally in a scatter environment, while investing a great deal of time in meeting with planning departments to upgrade the short-form medium into one that is planned along with investments in standard units. We know that due to this, short-form promotional advertising investment will expand and grow to become a more integral element in overall strategic investment in this year's upfronts.

We hear closed captioning could end up funneling as much as $1 billion a year in extra advertising revenue to the TV business as early as 2006. How so?

While we can discuss the potential of any marketplace growing this rapidly, the short message form could be explained as follows:

Currently, the marketplace calculates to about $250MM, mostly in syndication and limited network avails. With the January 2006 FCC mandate for closed-captioning, broadcast networks as well as the 65+ rated cable networks will have to spend more than $1MM each to physically close-caption their programming for the mandated 18 hours per day/ 7 days per week. To offset this expense (and generate additional incremental revenue), they can elect to solicit and include sponsorship in each program. Using extremely rough math to illustrate this growth potential, if (for example) in syndication a 2 HH rating in daytime generates a spot rate of roughly $6K, one spot per hour on a broadcast network including prime time would probably equate to 8-10 times that amount. If all broadcast and cable networks seek to ameliorate this expense through closed-captioning sponsorship, the addition of all of these units into the marketplace could potentially project growth to over $1B over all broadcast and cable networks. More likely though, this is what the market could look like after the first full year of mandated closed-captioning. This marketplace figure would also take into account its use in VOD, broadband, wireless devices, and other applications. Any or all of these operators could elect not to recoup these expenses and forego the opportunity to generate truly "incremental" revenue...but given the highly competitive media environment that exists and the increasing pressure to drive the top line, I believe more of them will seize the moment and do so...than won't.

What kind of feedback did you get after the AAAAs panel session?

Exceptional. I haven't yet been able to follow up on the extraordinary number of conversations that I've had since our panel session. Since this is a truly growth-oriented medium due to discovery and technology, I've found that people are intrigued by the potential opportunity to find creative ways to utilize it.

What Closed Captioned ad opportunities are most effective?

Here are the testing results on the TV10s Magid Study of 10s.doc as to why the 10 sec format is most effective versus the 30 sec format.

View it here.

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